As inflation subsides, a sharp increase in out-of-pocket health insurance costs is looming for 2025. Employers, responsible for providing health coverage to over 150 million Americans, are anticipating another year of significant price hikes for workplace health plans. Preliminary results from Mercer’s annual private health insurance survey indicate that companies are bracing for health plan costs to surge by 5.8% to 7% in the upcoming year.
The expected price increases for private workplace insurance far exceed overall inflation rates. Health insurance inflation, including coverage through the Affordable Care Act and other federally run health plans, stood at 3.3%, significantly higher than the general inflation rate of 2.5% recorded in August.
To mitigate these rising costs, more than half of employers (53%) are planning cost-cutting measures, a notable increase from the previous year’s 44%. However, these efforts are primarily aimed at saving the companies money and might result in higher out-of-pocket costs for employees through raised deductibles and other cost-sharing provisions.
2025 marks the third consecutive year of unusually high health insurance cost increases following a decade of average increases around 3%. These insights are preliminary and based on responses from over 1,800 U.S. employers. The full report will provide more comprehensive data later this year.
Out-of-Pocket Health Insurance Costs in 2025
According to the Kaiser Family Foundation (KFF), most workers with employer-provided health insurance face deductibles before accessing certain benefits. The average deductible for single workers is around $1,735, while for family plans, it can range from $3,000 to $4,900. Employers are considering raising deductibles in the coming year to help manage costs, placing a heavier burden on employees.
Premiums, the cost of the health care plan often paid on a monthly or annual basis, constitute another significant out-of-pocket expense for employees. A 5.8% increase in 2025 is projected to raise annual premiums to approximately $17,600 per worker, varying based on coverage type, employer size, and other factors. Typically, workers contribute a portion of their paycheck towards their premiums, with employers covering around 79% of the cost.
Despite this, employees are still expected to pay an average of $3,700 annually towards premiums. Contributing to the continued price surges are factors such as a shortage of healthcare workers and rising prescription drug costs. Employers have reported a 7.2% increase in drug costs this year, driven by higher demand for treatments related to various health conditions.
Stay informed about these escalating health insurance costs and plan ahead for potential financial adjustments to manage these increased expenses effectively.
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